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Morning Commentary: XPO’s 7 7/8% notes hold in 3-plus points above issue; September supply eyed
By Paul A. Harris
Portland, Ore., Aug. 18 – High yield was coming out of the gates strong on Monday morning, with synthetics up by about 3/8 of a point, as the stock market ripped higher, according to a market source.
The XPO Logistics, Inc. 7 7/8% senior notes due Sept. 1, 2019 (B1/B-) were at 103¼ bid, according to a trader, who said that they were 103 bid on Friday, a trader said.
Another trader reported a wide bid-offer on the notes, spotting them at 103 bid, 104 offered.
The $500 million deal priced last Thursday at par.
Elsewhere the BWAY Intermediate Co. Inc. 9 1/8% senior notes due Aug. 15, 2021 (Caa2/CCC/) were 101 bid, unchanged from Friday, a trader said.
The downsized $650 million issue priced at 99.364 to yield 9¼% on Aug. 7, decreased from $770 million.
“The market is ultra-quiet,” said a trader, who added that a lot of players are taking mandatory two-week vacations.
$40 billion eyed in September
Business is expected to ramp up in a big way during the month ahead, said the trader, who has been advised by dealers that issuance totals for September could hit $40 billion.
The record-breaking $7.1 billion outflow from the dedicated high-yield funds reported for the week to Aug. 6 seems like a distant, fading memory, said the trader, recounting that the funds posted $680 million of inflows for the most recent reporting period, which ended at the Aug. 13 close.
Meanwhile institutional high-yield fund managers have been taking advantage of price reductions resulting in part from geopolitical noise and interest rate expectations, said the trader.
The late July-early August storm in the high-yield market appears to have passed.
“Everybody back in the pool,” the trader said.
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